December 11, 2012 by shivusharma
So the L.A. Dodgers signed prized free agent pitcher, Zack Greinke, for $147m over 6 years. This contract would make Greinke the highest paid right-handed pitcher in baseball, and the second highest paid pitcher overall. We knew that Guggenheim Partners had some serious cash when they dropped $2.15b to purchase the franchise. They reaffirmed the size of their wallets when they traded for Red Sox cast-offs Adrian Gonzalez ($127m, 6yrs), Josh Beckett ($28m, 2yrs), and Carl Crawford ( $102.5m, 5yrs), and now have reminded us again that they aren’t afraid to out-bid everyone with this Greinke signing.
While I am happy for Dodgers fans for finally having an ownership group committed to doing (and spending) whatever it takes, I am concerned about the future fruitfulness of this spending spree. We just saw the Miami Marlins try and spend money aimlessly in the off-season, only to undergo a salary dump months later and begin rebuilding. This super-spending tactic has worked only a couple times in recent memory. The ’09 Yankees were the only team with an opening day payroll over $200m to win the World Series. That’s not saying that it can’t be done again, but when teams like the San Francisco Giants ($118m ’12, $98m ’10) and the St. Louis Cardinals ($105m, ’11) are able to win World Series’ without out-spending the Fat Cat teams, it speaks to the truth that you don’t need to be the most talented team to win, you just need to get hot at the right time.
Nonetheless, I understand where the Dodgers are going with this roster. This is Los Angeles, and with that comes the burden of having star power. Part-owner, Magic
Johnson, has said as much. Plus, if you have the cash to spend and improve your team, why not, so long as you are getting stars? The Dodgers upcoming TV deal with Fox Sports is rumored to be in the $6b range over 25 years. That comes out to $240m per year, so you can see where all this extra cash is coming from. Between Greinke, Adrian Gonzalez, Carl Crawford, Matt Kemp, and Andre Ethier, the Dodgers have over $500m committed to those five players ($569.5m to be exact). Let’s add to that the $26m they needed to negotiate with Korean pitcher Ryu Hyun-jin and the $36m they are giving him in his contract. This brings us to about $632m committed to six players.
Remember when I said the Dodgers would make Greinke the second highest paid pitcher in baseball? Well, before the end of the year they may also have the highest paid pitcher in baseball. Cy Young winner, Clayton Kershaw, is up for arbitration after 2013,
and I would not expect him to get any less than the $186m over 8 years that CC Sabathia received from the Yankees. In fact, considering that Kershaw will only be 25 years old when he is up for arbitration, it is pretty conceivable (at least to me) that he could receive $240m over 10 years. Let’s add that to our running subtotal of Dodgers’ salaries to get to $872m!! That is pretty crazy right? Just for fun let’s say they sign free agent Anibal Sanchez to bolster their rotation (which they are considering doing anways). And let’s add the 2 years remaining on Josh Beckett, Hanley Ramirez, and Chad Billingsly’s contracts, and Ted Lilly’s final year, getting us to over $1b on player salary! Simply astounding.
How will the Dodgers’ front office make up for all this added spending? Will ticket prices increase too much? Beer prices? Dodger Dogs? I am interested to see if this urge to buy a World Series roster will out-price some of the Dodger faithful. Baseball “star-power” is all well and good, but if the product you have on the field isn’t getting wins, all the money you spend won’t matter. It’s not the same as basketball, where one star can drive attendance for a franchise through losing seasons. Remember when Kobe was starting next to the infamous Smush Parker? In baseball, success of the team season after season, matters a little bit more. Moreover, all the extra money you will be charging your fans to pay for your miss-signings won’t be there if the extra cash they are putting up isn’t going to a winning team. Now if Dodger prices are relatively the same despite this spending spree, fans can enjoy the new direction ownership is taking them in.
Regardless of what happens, the Dodgers have a put a lot of pressure on themselves for the near future. They are playing a dangerous game with fans’ hopes with this “build a contender over night” philosophy. For the sake of the loyal fans I hope this strategy pays off and the Dodgers are able to be a consistent playoff team over the next handful of seasons. Los Angeles has the potential to be more than just a great sports market if things break right.
ACKNOWLEDGMENTS: All salary info is courtesy of www.spotrac.com